Stripping under-25s of benefits will knock young families off career ladder, claims Labour

Stripping young people of housing benefit will knock them off the career
ladder and stop them moving to find work, Labour has warned.

David Cameron’s speech will be the latest example of senior Conservatives pursuing a deliberately Tory agenda

3:04PM BST 24 Jun 2012

Under new welfare reforms to be announced by David Cameron, housing benefit for under-25s is expected to be scrapped to encourage youngsters to get a job or move back in with their parents.

The Prime Minister will use a speech in south-east England to outline future radical changes which are aimed at saving an extra £10 billion by 2016 on top of existing plans.

In an interview with The Mail on Sunday, Mr Cameron said: "We are sending out strange signals on working, housing and families.

"A couple will say, "we are engaged, we are both living with out parents, we are trying to save before we get married and have children and be good parents. But how dies it make us feel, Mr Cameron, when we see someone who goes ahead, has a child, gets the council home, gets the help that isn't available to us?

"One is trapped in a welfare system that discourages them from working, the other is doing the right thing and getting no help."

But Labour said the move would penalise young people who want to move from home to look for work.

Shadow Work and Pensions Secretary Liam Byrne said: "This is a hazy and half-baked plan when we need a serious back to work programme for young families.

"Many young families with their first foot on the career ladder will be knocked off if help with their rent is taken away. And young families that want to work won't be able to move where the jobs are.

"The way to get the spiralling benefits bill down is start getting young people and young families back to work. That's why Labour's Real Jobs Guarantee financed by a tax on bankers' bonuses is the right thing to do.

"I'm afraid this is another smokescreen from an out-of-touch Prime Minister who's now put our country back into a double dip recession, forced up youth unemployment to over a million and is doing nothing to fix the unfolding chaos at the DWP. "

The plan to axe benefit is likely to have exemptions for special cases including victims of domestic violence.

But Mr Cameron said helping the under-25s with rent was costing Britain 'a fortune.'

"We need a bigger debate about welfare and what we expect of people. The system currently sends the signal you are better off nor working, or working class."

Shadow Chief Secretary to the Treasury Rachel Reeves said the Government needed to sort out the economy because high unemployment meant taxpayers were spending more on unemployment benefits and housing benefit.

She told the Sky News Murnaghan programme: "So if the Government are really serious about dealing with the benefits bill, they've got to get the economy moving again, they've got to get people back to work.

"If you've got 2.6 million people out of work like we do at the moment, if you've got a million young people out of work, you're paying more out in benefits than you're getting less in, in tax revenue.

"That's not going to get the economy moving again, but also it's making it harder to get the deficit down as well. So to get the benefits bill down you need an economy that's growing and you need more people in work."

Another controversial reform which could come in further down the line is setting benefit payments regionally – which would mean less money going to claimants who live in less-expensive parts of the country.

Iain Duncan Smith, the Work and Pensions Secretary, raised the prospect of making this change earlier this year. At the moment, although housing benefit is set according to local rent levels, all other benefits, including Jobseeker’s Allowance, are paid at the same rate in all parts of the UK.

Some Tory MPs say the current system is unfair – with differing “incentives” on people to seek work depending on where they live. Liberal Democrats, however, would be likely to oppose any such changes.

In the Budget, delivered in March, George Osborne, the Chancellor, sprang a surprise on Mr Duncan Smith by effectively ordering him to cut £10 billion more from welfare by 2016 on top of the £18 billion his department has already pledged to achieve by 2014.

Sources close to Mr Duncan Smith, who was Tory leader between 2001 and 2003, hit back by suggesting that savings could be made by means testing benefits currently paid to all pensioners, which include winter fuel allowances, free TV licences and free bus travel.

However, Mr Cameron is understood to have ruled such changes out, citing a promise he made in the last general election campaign to protect such universal payments to the elderly.

There are currently tensions between No10 and Mr Duncan Smith’s department – although all sides are united on the overall purpose of the reforms: to insure nobody loses financially from going to work rather than remaining on benefit.

Mr Cameron’s speech will be the latest example of senior Conservatives pursuing a deliberately Tory agenda, following recent interventions from leading ministers on Europe, immigration, the replacement for Britain’s future Trident nuclear deterrent and moves to deal with “problem families”.

The aim is to boost Tory morale – and to achieve an opinion poll boost – by pursuing a “differentiation” strategy which risks alienating the Lib Dems. Since the Budget, which sparked several embarrassing U-turns, Labour have opened up a big lead over the Conservatives in the polls.

In an intervention earlier this year, the Prime Minister said his overall aim in reforming welfare was to stop people “languishing on the dole and dependency”.